Shadow IT is often the result of existing IT solutions not being able to deliver the right solution for a specific group of users. These users come from various parts of the organization but in most cases consist of users that are in one way or another improving or creating something new. The right IT tools offer people to become more effecient, share knowledge easier and deliver results faster. Users who are looking for these kind of tools are mostly executives and business managers involved in development work (organizational or product/service). These users have become much more demanding and knowledgeable about what IT solutions they need.

The use of shadow IT has certainly increased with the arrival of cloud computing. Without having to install a software or make big financial investments, it is now possible to quickly evaluate and implement a solution that fits your needs. Finding and purchasing software is now also much easier since product information, use cases and references can be found on the internet and does not require talking in IT language to a software vendor.

Downside for an organization might be the loss of control. IT departments aim to control the information flows. Security of the solution, information stored in different places and who has access to what are some concerns that IT has. Tackling these concerns are usually not due to the technical aspects of the IT solution but the user. In security the user is always the weakest link.

So how can both IT and business benefit? In our case we see firstly that the people that we talk to at our customer organizations are very knowledgeable. These are executives who know exactly what is missing, what value the new solution should deliver and what obstacles there are to implement a new solution. Secondly, in most cases the IT department is involved in the decision-making. This means that the business manager has to have a strong case why existing solutions are not delivering the right value and how IT can maintain a form of control.

IT benefits from users who can do their work more effectively (both within and outside the organizational boundaries) while maintaining  a minimum level of control over the information flows. It is therefore important that IT moves away from a ”one solution fits all” attitude and lets the users decide how they want to tackle their work challenges and how to support their work processes. Business on the other hand benefits from clearly understanding what specific problem they are trying to address with a new solution and being able to make this case to IT, if necessary. To support this notion: the majority of IT driven solution implementations fail. And more will fail in the future (source: Gartner).

Innovation always starts with a need. Than there’s an idea. Sometimes it’s clear but often we need to gather knowledge and opinions to formulate the idea. Once we have formulated the idea we go towards implementing it. The challenge of innovation lies in effectively linking the need, idea and implementation. There needs to be a process in place, whether formal or informal.

That is why we have spent a lot of time thinking about how we can provide a solution that is flexible enough to serve the needs of a large customer base but still effectively support each organization’s unique processes. We found that both our software’s usability and helping the customer align our solution with their process are in many cases equally important.

When thinking of usability it is important that ideas can be easily shared, voted and ranked. Then it should be possible to close the idea and move towards implementation. Choosing collaborators, assigning roles and tasks, and working on tasks with a clear overview. Supporting a process through our solution we do by helping our customer identify their processes, organizational specific needs and type of users. Organizing workshops for key users has proven a great way to not only discover best practices but also find new ways of collaborating thereby enhancing an innovation culture.

We see that many solutions either focus on the idea management part or on the implementation (project management). Some research suggests that innovation often fails because organizations tend to invest more on the ideation part then the actual implementation. Our view is that to be productive in a networked environment, where people often do not see each other or innovation happens ad hoc, it is crucial to link the need, idea and the implementation.

The McKinsey report ”The use of web 2.0 in business” from December 2010 analyzes a survey conducted by the same consultancy that shows that companies who use the web intensively gain greater market share and higher margins. What does this exactly mean?

I think that most executives do not need to be convinced anymore that organizations who use social networking and collaboration tools inside the organization will benefit from this. For example, people have quicker access to information, collaborating on projects is easier and the companies may even save money by replacing outdated and expensive legacy systems.

The real benefit however is in connecting with the outside world. McKinsey found that the companies who gain the biggest increases in market share and profit margins are those that have solutions in place that enable workers to collaborate with customers and partners more effectively.

For example the ability to make decisions lower in the organizational hierarchy and a willingness to form teams that comprise both in-house and external workers allow organizations to become more agile. Now I know what you are thinking: but we are doing this already to some extend! I sure hope so, but managing these relationships with the appropriate tool for a specific need seems to be done by an elite crop of organizations. Only 3% out of more than 3000 interviewed executives across different industries and regions are using both internal and external web 2.0 tools to create a truly networked organization.

In our customer conversations the number one question is: “Can I safely manage collaboration and its related sensitive information with colleagues and partners in one workspace?” It seems that companies have come to realize that the only way to implement innovation is by actively engaging customers/partners and sharing information openly. Access to the right people and knowledge at the right time is therefore crucial and those companies that really understand the business value of collaborating and innovating are the ones that are the most competitive.

And of course the answer is: “Yes you can!”

During the last decades we have seen the teamwork revolution that changed many of the old function oriented corporations into service oriented and agile businesses. I still remember how self-directed teamwork was practiced only in the most innovative and usually small companies that promoted this new working method as part of the hype. Since then those networks of teams have been evolving and getting more global and cross-functional across enterprises.

Agile teamwork is not a privilege of the small innovative businesses anymore. Large networked organizations are able to increase competitive advantage through the collaboration of small and independent teams. In many corporations the organizational culture has changed from one determined by a hierarchy to an adaptive hybrid, that enables multiple forms of management methods within the same organization. Allowing teams to be different from each other doesn’t mean that they are all going to their own direction without a control. It mostly requires stronger focus on strategic leadership instead of dictatorship.

For IT systems this is a great challenge. One large IT platform can’t serve all the different needs in management and therefore great variety of agile and social solutions are rolling in. The core production as well as customer service is usually built on the fixed processes supported with evolving ERP and project management systems. But what happens to the projects that are not part of the daily functions, such as business development or working with the partners? This is still too often a forgotten area of the management what comes to the tools used in enterprises.

There will be plenty of business development and change management projects across Nokia and Microsoft for sure. Regarding to the people whom I know from Nokia, they are taking this seriously. How about in your organization? How well does your tools support business development projects? Do you still use email to communicate with your customers and partners?

If social media enables better knowledge sharing, more effective communication and better bottom line results then everyone should be driving social media inside the organization. In reality organizations are still made up from processes and structures, thus we expect change to be driven by leadership. In other words it should be CxO level management that drives new company wide solutions.

I believe we first need to define whether we are talking about social media tools or actual solutions. A tool for example microblogging can help people share information and can exist as a separate entity in the organization’s IT environment. These tools we see spread in the organization often virally. In most cases top management discovers that such a tool is used when a large number of workers are already using it.

Solutions are an integral part of an organization’s IT environment since they in one way or another are integrated with other systems. They also aim to solve a specific problem, for example CRM provides a sales process. Therefore the implementation process of social media solutions is often more traditional. Then the question of who should be charge of such an implementation becomes more apparent.

Solutions have a difficulty to spread virally throughout the organization. Since IT departments are involved questions like security are raised. Solutions also need more than an active community to succeed. The question then becomes whether a social media solution is part of the company’s strategy or not. This would be role of a CxO to define.

To be continued!

People believe that if you are not in, you are completely out – that’s what most social media consultants are currently saying. Reminds me quite much of 90′s when new media companies were selling web sites. Back then I used to work with cool companies like Razorfish and for me it’s easy to see the similarities between the current. And I know I’m not alone with these thoughts. Alf Rehn, a global business thinker, ended up to Kauppalehti’s headlines in Finland after saying this loud. As you can read from Alf Rehn’s blog, he’s not against the social media and didn’t mean to be so sensational. The social media subject is simply so much in the hype right now.

Under this huge pressure large corporations have started to adapt social solutions for internal enterprise networking needs. It’s currently done simply by adding together all possible known solutions as a platform or set of cloud services, including wikis, blogs, social feeds and you-name-it social sites. The problem is that it’s actually not so easy to understand when those concepts are really useful and how they should be implemented. Tools have become more important than solutions.

A great example is microblogging. During last two months I’ve now seen more than five customer cases where large enterprise (>5000 employees) have started to use internal microblogging service and after six months executives have realized that discussion in those feeds is actually nonsense and the activity levels are fading. The problem is not in microblogging itself (that’s one of the best ways to keep your social network current!), but without clear targets and business objectives the established social network is loosing it’s productivity. That’s one reason why we have added engagement and measuring to our LumoFlow social workspaces concepts.

What we have learned so far is that the answer to many of these questions can be found from the theories of social productivity. “Social” issues cannot be solved with traditional IT-solutions and platforms. For example Gartner predicts that through 2012 over 70 percent of IT-dominated social media initiatives will fail:

“Organizations are accustomed to providing a technology platform (such as, e-mail, IM, Web conferencing) rather than delivering a social solution that targets specific business value.”

I couldn’t agree more. It’s understandable when we look a bit back to history. IT managers are used to solve the problems in process improvement, but when we are talking about social productivity the issues are related to people. Instead of talking processes and platforms, we should be talking about social theories and focused business solutions.

Could some day IT-dominated become for example HR-dominated? Maybe, but what’s for sure is that CIO should now hold his horses and find the business case before installing a new platform.

As I wrote earlier we are now looking beyond social media with the aim to identify what are the trends after the big hype. For me the social media phenomenon has been bigger than I ever believed. I was the last man in our company who logged into Facebook or allowed using Twitter as an official customer service interface. I was pretty sure that this trend will soon be shifted to another cool stuff and life goes on.

But after some years and countless discussions with our customers and business partners, it seems that social media is not only growing in online communications, but the social wave has gone through all enterprise solutions inside and outside the intranet.

“By 2014, social networking services will replace e-mail as the primary vehicle for interpersonal communications for 20 percent of business users.” – www.gartner.com

When social media started to replace traditional communications solutions such as email and old fashion news groups, the word social spread among solutions all over the web. Almost every piece of software has became social, including old traditional business applications such as Salesforce.com with the new Chatter service.

This is partly because of the nature of social software. It’s available for regular people, not just technical rocket scientists. People can access to it anytime and anywhere. The same goes to the new wave of Enterprise 2.0 solutions. And this is what worries the old gate keepers at IT department.

If you look for example how Yammer has been spreading within the organizations, it’s easy to understand why CIO’s are a worried about this phenomenon. Small group of employees logs in to the free online service and usually bypass the regulations of data administration while doing this. These pioneers then call in another group of co-workers and after a while people realize Yammer is the main communication channel across the enterprise. There goes the money that company has already invested to sophisticated communication systems. And no need to mention the “fresh” proposal negotiations with the new vendor – suddenly a free service is not free anymore when you have 2000 people hooked into it.

For CIO’s this has caused a completely new kind of role in their work. In the past IT departments has been serving the rest of the company with the solutions that where difficult to build and almost impossible to maintain. If anything went wrong people came to nerds for asking help. But nowadays things have turned upside down. A single team can start using new solution online if the current service doesn’t fulfill all the requirements. No need to negotiate with IT department or boss.

Thanks to social media and the revolution of “free” online services, IT department doesn’t have an ultimate control anymore over the software that people are using. This is not a bad thing at all if we look at the big picture. The end users have a bigger control to choose the right solution, which has already affected for example to usability. And in many companies CIO’s are happy to support this as it provides more time to plan the IT strategy instead of maintaining the servers.

It’s a continuous story starting with article “Social Media in Enterprises” published in Kauppalehti’s handbook for CIO (Kauppalehti is a leading business daily in Finland) and following with blog writings containing executive interviews of top enterprises in Finland. This exploration in the world of enterprise collaboration and social software will end to the web seminar held at October 21st 2010 in Helsinki.

Stay tuned!